1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," providing for a waterfront development tax

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15the Tax Reform Code of 1971, is amended by adding an article to



19Section 1701-J. Scope of article.

20This article establishes the waterfront development tax

1Section 1702-J. Definitions.

2The following words and phrases when used in this article
3shall have the meanings given to them in this section unless the
4context clearly indicates otherwise:

5"Business firm." An entity authorized to do business in this
6Commonwealth and subject to taxes imposed under Article III, IV,
7VI, VII, VIII, IX or XV or the tax under Article XVI of the act
8of May 17, 1921 (P.L.682, No.284), known as The Insurance
9Company Law of 1921. The term includes a pass-through entity.

10"Contribution." A donation of cash or personal property made
11pursuant to this article.

12"Department." The Department of Community and Economic
13Development of the Commonwealth.

14"Eligible applicant." A business firm or individual meeting
15all of the following:

16(1) Has contributed to a waterfront development

18(2) Is subject to a tax imposed by Article III, IV, VI,
19VII, VIII, IX or XV or Article XVI of the act of May 17, 1921
20(P.L.682, No.284), known as The Insurance Company Law of

22"Pass-through entity." A partnership as defined in section
23301(n.0), a single-member limited liability company treated as a
24disregarded entity for Federal income tax purposes or a
25Pennsylvania S corporation as defined in section 301(n.1).

26"Waterfront." A site which is directly adjacent to a body of

28"Waterfront development organization." <-A An authority
29established under the act of December 6, 1972 (P.L.1392,
30No.298), known as the Third Class City Port Authority Act, or a

1nonprofit entity which meets all of the following:

2(1) <-Is For a nonprofit entity, is exempt from Federal
3taxation under section 501(c)(3) of the Internal Revenue Code
4of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

5(2) Has been in existence for a minimum of five years.

6(3) Has a board of directors which meets at least once

8(4) Has completed a waterfront development plan.

9(5) Uses at least 95% of its annual contributions from
10eligible applicants for projects authorized under this
11article. For purposes of this definition, <-an authority or a
12nonprofit entity "uses" its annual contributions when it
13expends or otherwise encumbers those funds for expenditure
14during the then current fiscal year of the <-authority or
15nonprofit entity or during the next succeeding fiscal year of
16the <-authority or nonprofit entity.

17"Waterfront development plan." A plan approved by the
18Department of Community and Economic Development which meets all
19of the following:

20(1) Provides for the development or enhancement of
21waterfront property which creates public access to the water,
22increases property values, restores ecology and catalyzes
23further financial investment and job creation to incentivize
24future economic development.

25(2) Adheres to current environmental practices.

26(3) Considers and integrates approaches that support
27natural and native habitat.

28(4) Considers and integrates architectural and landscape
29design elements and standards.

30"Waterfront development project." A project to develop a

1waterfront site or area or a project which creates or improves
2public access and connections to the waterfront. The term may

4(1) Streets and public rights-of-way.

5(2) Waterfront parks, gardens and open spaces.

6(3) Enhancement of access to public utilities.

7(4) The promotion of erosion control, storm water
8management and other environmental projects which promote
9economic development.

10(5) Water transportation facilities for use by the
11public, including water transit landings and boat docking.

12(6) Amenities, including infrastructure and recreational

14Section 1703-J. Waterfront Development Tax Credit Program.

15The Waterfront Development Tax Credit Program is established
16to encourage private investment in waterfront property which
17creates public access to the water, increases property values,
18restores ecology and catalyzes further financial investment and
19job creation.

20Section 1704-J. Qualification of waterfront development

22(a) General rule.--The following shall apply:

23(1) To qualify under this article, a waterfront
24development organization shall meet all of the following

26(i) Submit information to the department which
27enables the department to confirm that the organization
28is exempt from Federal taxation under section 501(c)(3)
29of the Internal Revenue Code of 1986 (Public Law 99-514,
3026 U.S.C. § 1 et seq.).

1(ii) Certify to the department, on a form provided
2by the department, that the organization is eligible to
3participate in the program established under this article
4and agree to annually report by September 1 of each year
5all of the following information:

6(A) The number of waterfront development
7projects funded, in total and by municipality, during
8the immediately preceding year.

9(B) The amount expended for waterfront
10development projects, in total and by municipality,
11during the immediately preceding year.

12(C) The number and nature of funding requests
13received, in total and by municipality, including a
14breakdown of waterfront development projects approved
15and rejected, during the immediately preceding year.

16(D) The number of project applications
17processed, in total and by municipality, and the
18amount of any application fees charged per project
19application or in the aggregate through a third-party

21(E) The number of waterfront development
22projects completed, in total and by municipality,
23during the immediately preceding year.

24(F) A copy of the Federal Form 990 or other
25Federal form of the waterfront development
26organization which indicates the tax status of the
27organization for Federal tax purposes, if any.

28(G) A copy of a compilation, review or audit of
29the financial statements of the waterfront
30development organization conducted by a certified

1public accounting firm.

2(2) The department shall distribute sample forms,
3together with the forms on which the information under
4paragraph (1)(ii) is to be certified, to each waterfront
5development organization not later than May 1 of each year.

6(3) The department may not require any additional
7information from a waterfront development organization to
8meet the requirements of this section than is expressly
9authorized under this subsection.

10(b) Notification.--The department shall notify a waterfront
11development organization if the organization meets the
12requirements of this section for the current fiscal year not
13later than 60 days after the waterfront development organization
14has submitted the information required under this section.

15(c) Publication.--The department shall annually publish a
16list of each waterfront development organization approved under
17this section in the Pennsylvania Bulletin. The list shall also
18be posted and updated as necessary on the publicly accessible
19Internet website of the department.

20Section 1705-J. Waterfront development projects.

21(a) General rule.--To qualify for a tax credit under this
22article, contributions made to a waterfront development
23organization shall be used by the organization for a waterfront
24development project approved under this section.

25(b) Approval.--The following shall apply:

26(1) A waterfront development organization shall apply to
27the department for approval of a waterfront development
28project as eligible for a waterfront development tax credit
29by submission to the department of an application including
30all of the following information:

1(i) The location of the waterfront development

3(ii) The type of waterfront development project.

4(iii) A detailed description of the waterfront
5development project, including any architectural and
6engineering drawings.

7(iv) The status of the waterfront development

9(v) The anticipated start date and completion date
10for the waterfront development project.

11(vi) The life expectancy of the waterfront
12development project and a plan for project maintenance
13following completion.

14(vii) The estimated cost of the waterfront
15development project, the total amount of contributions
16received which have been designated for the waterfront
17development project and the funding source to be used for
18payment of unfunded costs, if any.

19(viii) Analysis of the direct current and future
20economic benefits derived from the waterfront development
21project, including indirect and direct job creation

23(ix) The manner in which the organization will do
24all of the following:

25(A) Verify eligibility of costs.

26(B) Monitor progress of the waterfront
27development project.

28(C) Assure that contributions received are used
29for the waterfront development project for which they
30have been designated.

1(x) Any other information required by the

3(2) The department, in conjunction with the Department
4of Conservation and Natural Resources, shall review
5applications received from waterfront development
6organizations under paragraph (1).

7(3) Within 60 days after receipt of an application, the
8department shall notify the waterfront development
9organization of its approval or disapproval of a waterfront
10development project. If the application is disapproved, the
11notice of disapproval shall include the reasons for
12disapproval. A waterfront development organization shall have
1330 days after receipt of a notice of disapproval to resubmit
14the application.

15(c) Completion.--Upon completion of a waterfront development
16project approved under subsection (b), the waterfront
17development organization shall submit written notice of project
18completion to the department. The notice shall include all of
19the following information:

20(1) Certification that the waterfront development
21project is complete.

22(2) An upkeep and maintenance plan, if applicable to the
23waterfront development project.

24(3) Any other information required by the department.

25(d) Inspection.--Waterfront development projects approved
26under subsection (b) may be subject to inspection by the
27department or its designated agent.

28Section 1706-J. Application for tax credit.

29(a) General rule.--An eligible applicant shall apply to the
30department for a tax credit under this article. An eligible

1applicant shall receive a tax credit under this article if the
2waterfront development organization that receives the
3contribution from the eligible applicant appears on the list
4established under section 1704-J and the department has approved
5the waterfront development project for which the contribution is
6to be used under section 1705-J(b).

7(b) Time.--The following shall apply:

8(1) Except as otherwise provided in paragraph (2), the
9department may accept applications for tax credits under this
10article not earlier than July 1 of each fiscal year.

11(2) The application of any eligible applicant for tax
12credits available during a fiscal year as part of the second
13year of a two-year commitment or as a renewal of a two-year
14commitment which was fulfilled in the previous fiscal year
15may be accepted not earlier than May 15 preceding the start
16of the fiscal year.

17(c) Availability of tax credits.--Tax credits under this
18article shall be made available by the department on a first-
19come, first-served basis within the limitation established under
20section 1708-J.

21(d) Contribution.--A contribution by an eligible applicant
22shall be made not later than 60 days following the approval of
23an application under this section.

<-24(e) Compliance provisions.--Before an application is
25approved, the Department of Revenue must make a finding that the
26applicant has filed all required State tax reports and returns
27for all applicable tax years and paid any balance of State tax
28due as determined at settlement, assessment or determination by
29the Department of Revenue.

30Section 1707-J. Grant of tax credit and amount.

1(a) General rule.--In accordance with section 1708-J(a), the
2Department of Revenue shall grant a tax credit against any tax
3due under Article III, IV, VI, VII, VIII, IX or XV or under
4Article XVI of the act of May 17, 1921 (P.L.682, No.284), known
5as The Insurance Company Law of 1921, to an eligible applicant
6providing proof of a contribution to a waterfront development
7organization in the taxable year in which the contribution is
8made. The tax credit shall not exceed 75% of the total amount
9contributed by the eligible applicant during the taxable year.

10(b) Additional amount.--The Department of Revenue shall
11grant a tax credit of up to 90% of the total amount contributed
12during the taxable year if the eligible applicant provides a
13written commitment to provide the waterfront development
14organization with the same amount of contribution for two
15consecutive tax years. The eligible applicant shall provide the
16written commitment to the department at the time of application
17for the tax credit.

18(c) Combination of tax credits.--An eligible applicant may
19receive tax credits from the Department of Revenue in any tax
20year for any combination of contributions under subsection (a)
21or (b).

22(d) Pass-through entity.--The following shall apply:

23(1) If a pass-through entity does not intend to use all
24approved tax credits under this article, it may elect in
25writing to transfer all or a portion of the tax credit to its
26shareholders, members or partners, in proportion to the share
27of the entity's distributive income to which the shareholder,
28member or partner is entitled, for use in the taxable year in
29which the contribution is made or in the taxable year
30immediately following the year in which the contribution is

1made. The election shall designate the year in which the
2transferred credits are to be used and shall be made
3according to procedures established by the Department of

5(2) A pass-through entity and a shareholder, member or
6partner of a pass-through entity shall not claim the tax
7credit under this article for the same contribution.

8(3) The shareholder, member or partner of a pass-through
9entity may not carry forward, carry back, obtain a refund of
10or sell or assign the tax credit.

11(e) Restriction on applicability of credits.--No tax credits
12granted under this article shall be applied against any tax
13withheld by an employer from an employee under Article III.

14Section 1708-J. Limitations.

15(a) Aggregate amount.--The total aggregate amount of all tax
16credits under this article shall not exceed $10,000,000 in any
17fiscal year.

18(b) Activities.--No tax credit shall be granted for
19activities that are a part of an eligible applicant's normal
20course of business.

21(c) Tax liability.--The following shall apply:

22(1) Except as provided in paragraph (2), a tax credit
23granted under this article for any one taxable year may not
24exceed the tax liability of an eligible applicant.

25(2) In the case of a credit granted to a pass-through
26entity which elects to transfer the tax credit according to
27section 1707-J(d), a tax credit granted for any one taxable
28year and transferred to a shareholder, member or partner may
29not exceed the tax liability of the shareholder, member or

1(d) Use.--A tax credit not used by the eligible applicant in
2the taxable year the contribution was made or in the year
3designated by the shareholder, member or partner to whom the
4credit was transferred under section 1707-J(d) may not be
5carried forward or carried back and is not refundable or

7Section 1709-J. Lists.

8The Department of Revenue shall provide a list of all
9waterfront development organizations receiving contributions
10from eligible applicants granted a tax credit under this article
11to the General Assembly not later than June 30 of each year.

<-12Section 1710-J. Recapture of tax credits.

13(a) Repayment.--If a waterfront development organization
14fails to complete a waterfront development project under section
151705-J, the waterfront development organization shall repay to
16the Commonwealth any tax credits granted under this article for
17any contributions to the waterfront development organization.

18(b) Assessment and collection.--If the waterfront
19development organization fails to repay the amount due under
20subsection (a) within 30 days of the date of a demand letter
21from the department, the department shall notify the Department
22of Revenue within 60 days of the date of the demand letter from
23the department. The Department of Revenue may issue an
24assessment against the waterfront development organization for
25the amount not repaid. The assessment and collection of this
26amount shall be made pursuant to the provisions of Article II.
27If the waterfront development organization fails to pay the
28assessment, the board of directors may be held jointly and
29severably liable for the unpaid amount.

30Section 2. This act shall take effect in 60 days.